LONDON: The European Bank for Reconstruction and Development (EBRD) said on Tuesday its board has approved a 4 billion euro capital increase that will enable the bank to double its Ukraine investments once reconstruction there begins.
The increase, the third in the bank’s history, will bring its capital base to 34 billion euros once it takes effect on December 31, 2024.
It comes at a time when Ukraine’s bilateral funders, most significantly the United States, have showed signs of donor fatigue, which has weighed on Ukraine’s bond prices.
In a statement, the EBRD said the move reflected its view that supporting Ukraine should be its highest priority but that it also needed to continue supporting projects in other regions.
“The increase in the bank’s capital will enable us to deliver more and become an even stronger bank – a stronger bank for Ukraine, a stronger bank for all our economies and clients, and a stronger bank for our shareholders,” EBRD President Odile Renaud-Basso said.
The EBRD has been the largest institutional investor in Ukraine for the past 30 years, greatly boosting its support since Russia’s 2022 invasion.
It deployed 3 billion euros ($3.3 billion) to Ukraine for 2022-2023.
Ratings agency Fitch pegged the EBRD’s net exposure to guarantees to Ukraine at 2.5 billion euros in June, accounting for 12.8% as a ratio of shareholder equity.
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Fitch warned that the EBRD, and the World Bank’s International Bank for Reconstruction and Development (IBRD), could lose their coveted triple-A credit ratings if Ukraine defaulted on its loans.
EBRD shareholders will be entitled to subscribe to additional shares as part of the capital increase, with the first subscriptions expected in early 2024 and payments starting from early 2025.
The EBRD has 72 national shareholders in addition to the European Union and the European Investment Bank, and has invested more than 190 billion euros since its foundation in 1991.
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